Brazil: Inflation hits over four-year high in April
Consumer prices increased a seasonally-adjusted 0.31% from the previous month in April, below March’s 0.93% rise. April’s result marked the softest rise in prices since January and the moderation was largely due to falling prices for transportation.
Inflation came in at 6.8% in April, up from March’s 6.1% and marking highest inflation rate since November 2016. Annual average inflation rose to 3.9% in April (March: 3.6%).
Commenting on the outlook for inflation, Alberto Ramos, economist at Goldman Saches, noted:
“Overall inflation is not out of control but the recent dynamics (including rising inflation expectations and the large increase in fuel prices; +35.1% yoy) require close monitoring. In our assessment, at this stage the main upside risk to inflation is financial and cost-push pressures, rather than demand-pull. Failure to address medium-term fiscal sustainability, and rising short- and medium-term political risk/policy could generate pressure on the capital account, un-anchor the currency and inflation expectations and through those channels contribute to the deterioration of the inflation outlook.”